Employers want to do everything within the law to make workers change their lifestyles, and they expect health plans to help
It must have seemed like a pretty good idea at the time. Tribune, owner of newspapers and other media outlets, launched a program this year in which employees and any of their dependents who smoke must pay the company $100 a month above contributions to premiums. However, instead of hosannas from workers for taking such an interest in their health, Tribune was met by a grievance against the Baltimore Sun from the Washington-Baltimore Newspaper Guild, charging that the smoking penalty violates a contract that says the Sun may not raise health care premiums by more than 4 percent a year.
“Then, with the smoking penalty, you get $100 on top of that,” says Bill Salganik, a health reporter for the Sun and the president of the Washington-Baltimore Newspaper Guild.
That’s the legal argument, but Salganik, who for the record does not smoke and gets his insurance through his wife’s plan, says he is also philosophically opposed to the penalty.
“They haven’t tried positive steps first,” says Salganik, adding that the company only began to offer smoking-cessation classes when it established the smoking penalty. “I know that many employers have, but Tribune hasn’t made any kind of effort.”
Scott v. Scotts
Then there’s Rodgrigues v. Scotts Co., a case in which an employee of Scotts-Miracle Gro alleges that he was fired for failing a nicotine test. Scott Rodrigues wants compensatory damages and wants his job back, charging that the company violated his right to privacy. (Su Lok, a spokeswoman for the Scotts Co., says that the company has filed a motion to dismiss.)
In his lawsuit, Rodgrigues points out that “Scotts has no policies compelling employees to abstain from other legal but unhealthy practices, including obesity, consumption of alcohol, failure to exercise, skydiving, excessive television viewing, eating processed sugars, owning dangerous pets, flying private aircraft, mountain climbing, downhill ski racing, single-handed sailing, or spreading toxic chemicals on lawns.”
This summarizes what many people fear about wellness programs. That fear springs from a deep libertarian strain in the American psyche, one that can be summed up by the caution, warning, or plea, “Just leave me alone.”
The Sun grievance and Rodrigues underscore the legal pitfalls of extreme wellness programs. The federal government is also taking a look. The Equal Employment Opportunity Commission is investigating whether aspects of wellness programs violate the Americans with Disabilities Act or HIPAA, the Health Insurance Portability and Accountability Act of 1996.
Christine Saah Nazer, an EEOC spokeswoman, says that the EEOC is “looking into the issue of wellness programs, but the commission is not ready to issue a public document on the issue.”
However, the Department of Labor has released guidelines on just what may and may not be done. For instance, a smoker could avoid being penalized by participating in a smoking-cessation program. The DOL wants everybody to be treated equally when wellness incentives are put in place.
“As employers and health plans become more aggressive in attempting to get employees to take care of themselves and live healthier lifestyles, the government is going to be there to make sure that all employees are treated on an even playing field and that the standards set by HIPAA are not ignored,” says Sharon Cohen, legal counsel for Watson Wyatt Worldwide, the big consulting company.
All of which may seem to reinforce health plans’ historical reluctance to get involved in wellness. That reluctance always made business sense. The wellness program paid for by UnitedHealthcare today might wind up helping Aetna years from now.
Now, there are legal and regulatory headaches, too.
Even so, insurers may find it difficult to keep their distance, because HIPAA and ADA guidelines mandate that employers not have access to specific medical data about specific workers. Only health plans and third-party administrators may have such access.
More to the point: Employers want health plans to help, and that insistence puts health plans in a very interesting position, says Thomas Parry, PhD, president of the Integrated Benefits Institute, a not-for-profit think tank that focuses on health issues and that includes about 400 employer members. “They can feel threatened, because plans have traditionally managed health care costs, or they can view wellness as an opportunity to strengthen ties to key employers.”
UnitedHealthcare last summer began to offer a high-deductible plan called Vital Measures to mid-sized employers in Rhode Island, Pennsylvania, Ohio, and Colorado.
UnitedHealthcare offers $500 credits against a $2,500 annual deductible to members who meet specific standards for nicotine use, blood pressure, cholesterol level, and body-mass index. In other words, employees who do well in all four categories will see their deductible reduced from $2,500 to $500.
In addition, reasonable alternatives are available when achieving a goal is medically inadvisable or unreasonably difficult because of a medical condition. An obvious example: A pregnant woman need not meet body-mass index goals.
“The key thing we need to address is, how do we keep employers at the table in the group insurance market and how do we keep consumers retaining coverage when they have it offered to them?” says Tom Beauregard, chief executive officer of United Essentials, the product development group within UnitedHealthcare. “We have to, as an industry, get more aggressive with behavior change because it drives health care costs.”
Not too aggressive, however. “The attempt to be egregious or harsh doesn’t gain us anything,” says Douglas J. Short, president of BeniComp, the third-party administrator that runs Vital Measures. Short says that some measures (such as raising a member’s premium contribution) that are, in fact, harsh have somehow managed to avoid scrutiny and backlash, at least for now.
“Finding incentives that are meaningful but not harsh is a complex issue,” says Short. “Vital Measures uses credits that reduce an employee’s deductible. An employer may choose four lifestyle situations to monitor — for example, BMI, smoking, cholesterol, or blood pressure. The employer could affix a value of $250 for each situation that is under control. An employee with one situation under control would find his deductible reduced by $250, and up to a $1,000 reduction if all four factors are controlled. Others attempt to increase your monthly premium or withhold cash incentives, which are felt to be more of a stick than a carrot, and still others attempt to use movie tickets, which then lack meaningfulness.”
Beauregard says that research is key in making sure that encouragement doesn’t become badgering. “Before we got into these activity-based programs, we spent a lot of time in consumer research, and one of the key findings is that consumers are ready for activity-based models,” says Beauregard. “They get it. They’ve reached a tolerance point in terms of cost-shifting, both in terms of plan design and payroll deduction. So they’re actually understanding the need to give individuals rewards based on health status. They want it to be attached to their health insurance design. They want to find ways to reduce the cost of their coverage, whether that is deductible credit or reductions in premiums.”
It always comes down to cost, doesn’t it? Employers and now, apparently, consumers see wellness as one way to reduce the costs of health care and coverage.
Health plans will be asked to do as much as they can, short of saying “You will live healthily — or else!” The problem will be in determining just where the line can been drawn.
Incentives might hold key to wellness
It’s simple: Health plans will almost certainly have to become more involved in wellness because employers have bought into the concept in a big way.
“Several things may be in play here,” according to the Integrated Benefits Institute, which studies benefit matters from the employer’s point of view. “First, employers have scarce resources, so they may focus primarily on getting employees involved (after all, it’s hard to have an impact if employees don’t participate). Second, it may be that employers can track participation in a straightforward manner, but they are more challenged by quantifying behavior change and outcomes.”
In addition, the legal and regulatory pushback on wellness might best be handled by health plans or third-party administrators because under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Americans with Disabilities Act, employers for the most part are not permitted to see specific medical data about individual workers.
The IBI surveyed over 500 employers (with roughly 5 million workers) and found that a majority favors using incentives (i.e., non-monetary gifts, return-to-work benefits) over penalties (i.e., copayment reduction, benefits reduction).
Note: IBI conducted the poll in partnership with Harris Interactive. The Web survey was open June 11 to July 13, 2007. The final sample includes 500 employers representing roughly 5 million employees.
Source: Incentives for Healthy Behavior and Workforce Productivity, Integrated Benefits Institute